Great Western Minerals looks to South Africa for rare earths

As China continually tightens its reigns on rare earth exports, Great Western Minerals Group (GWG-V) is trying to secure its own supply by signing an option agreement with a South African company to refurbish, recommission and operate an abandoned mine.

The Steenkampskraal underground mine in Western Cape could produce enough rare earths to fully supply Great Western’s UK-based subsidiary, Less Common Metals, a downstream processor of rare earth products used in the permanent magnet industry.

“To mitigate risk and guarantee supply we wanted to find a near term production source outside of China,” said executive chairman, Gary Billingsly from his Saskatoon office.

Every year China cuts back on pure rare earth exports so it can expand its own downstream processing industry. And since it produces about 95% of the world’s rare earths, this is having a major impact on manufacturers elsewhere in the world. Right now, China consumes about half of the 120,000 tonnes it produces, but it’s expected the Asian superpower will use up all of its production by 2012.

Great Western expects to bring its Hoidas Lake rare earth project in northern Saskatchewan into production by 2013 but the Steenkampskraal mine in South Africa could be brought online within two years.

Steenkampskraal is located about 350 km northwest of Cape Town, can be reached by paved and gravel roads and is close to both a rail line and a port facility.

“That’s what attracted us to it,” Billingsly said. “It has a proven resource, it could be fully permitted fairly quickly and it’s near a port that could supply our facility in England.”

Steenkamspskraal was mined for thorium from monazite rock between 1952 and 1963 when it was operated by a subsidiary of Anglo American (AAUK-Q , AAL-L). The mine also has a high percentage of rare earth metals.

Great Western has signed the agreement with a company called Rareco, which acquired Steenkampskraal in 1989 with the intention of producing rare earths. That was around the time that china took global control of the rare earth market and the project was put on hold until recently.

Billingsly says the radioactivity of the thorium was a concern, but past studies by numerous reputable sources have shown that it can be removed from the rare earth concentrate so as not to be radioactive.

In addition, one of the groups that Rareco has been talking to is a coal producer and major provider for the utilities in South Africa, where there’s a significant power supply problem. Utilities have been considering building thorium reactors. Billingsly says this company is interested in buying thorium and storing it in concrete underground at the mine site until a later date.

“If we were disposing thorium as a waste product, that’s when it can be a problem, but in this case the site will be permitted to store thorium until the purchaser is ready to take delivery of it,” Bililngsly says. “It’s one of the conditions.”

Great Western expects to produce about 2,500 tonnes of rare earths per year over 10 years based on historical resource figures that are being updated. Billingsly says there is broken ore underground and a rock dump on surface that averages 5-8% total rare earth oxides (TREO).

The deposit is tablular in shape with a known strike length of 400 metres and has been traced down dip for 250 metres. Thickness ranges from 30 cm to 4 metres and the average insitu grade is 16.74% TREO. The deposit also contains significant amounts of copper, gold and phosphate which could be recovered as byproducts. The company says it would do further exploration work to extend the mine life.

Great Western is also looking into processing monazite waste rock from other operations in the area, doubling its production to 5,000 tonnes a year.

Great Western will have the option to acquire 100% of the rare earth metals mined there but the operation will be held by three partners; Rareco, a Historically Disadvantaged South African partner, and itself.

The HDSA partner is needed to convert the old mining licence into a new one. Rareco has been negotiating with a major mine operator in South Africa that would qualify as an HDSA partner, that it says would bring a lot of technical expertise to the project.

Billingsly says he was impressed with the infrastructure both at and surrounding the mine.

“The ground workings were in terrific shape, you would’ve though it had been shut down last week rather than 40 years ago,” Billingsly says. “There was very little loose rock and all the timbers are in great shape.”

In the meantime, Great Western will be heading back to South Africa to do its own sampling and assaying of material.